Baker Hughes Company Announces Second Quarter 2021 Results
- Orders of
$5.1 billion for the quarter, up 12% sequentially and up 4% year-over-year. - Revenue of
$5.1 billion for the quarter, up 8% sequentially and up 9% year-over-year. - GAAP operating income of
$194 million for the quarter, up 18% sequentially and favorable year-over-year. - Adjusted operating income (a non-GAAP measure) of
$333 million for the quarter was up 23% sequentially and favorable year-over-year. - Adjusted EBITDA* (a non-GAAP measure) of
$611 million for the quarter was up 9% sequentially and up 38% year-over-year. - GAAP loss per share of
$(0.08) for the quarter which included$0.18 per share of adjusting items. Adjusted earnings per share (a non-GAAP measure) was$0.10 . - Cash flows generated from operating activities were
$506 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was$385 million .
The Company presents its financial results in accordance with GAAP. However, management believes that using additional non-GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. Please see reconciliations in the section entitled "Reconciliation of GAAP to non-GAAP Financial Measures." Certain columns and rows in our tables and financial statements may not sum up due to the use of rounded numbers.
*Adjusted EBITDA (a non-GAAP measure) is defined as operating income (loss) excluding depreciation & amortization and operating income adjustments.
|
|
Three Months Ended |
|
Variance |
||||||||||||||
|
(in millions except per share amounts) |
|
|
|
|
Sequential |
Year-over- |
|||||||||||
|
Orders |
$ |
5,093 |
|
|
$ |
4,541 |
|
|
$ |
4,888 |
|
|
|
12 |
% |
4 |
% |
|
Revenue |
5,142 |
|
|
4,782 |
|
|
4,736 |
|
|
|
8 |
% |
9 |
% |
|||
|
Operating income (loss) |
194 |
|
|
164 |
|
|
(52 |
) |
|
|
18 |
% |
F |
||||
|
Adjusted operating income (non-GAAP) |
333 |
|
|
270 |
|
|
104 |
|
|
|
23 |
% |
F |
||||
|
Adjusted EBITDA (non-GAAP) |
611 |
|
|
562 |
|
|
444 |
|
|
|
9 |
% |
38 |
% |
|||
|
Net loss attributable to Baker Hughes |
(68 |
) |
|
(452 |
) |
|
(195 |
) |
|
|
85 |
% |
65 |
% |
|||
|
Adjusted net income (loss) (non-GAAP) attributable to Baker Hughes |
83 |
|
|
91 |
|
|
(31 |
) |
|
|
(9 |
)% |
F |
||||
|
EPS attributable to Class A shareholders |
(0.08 |
) |
|
(0.61 |
) |
|
(0.30 |
) |
|
|
86 |
% |
71 |
% |
|||
|
Adjusted EPS (non-GAAP) attributable to Class A shareholders |
0.10 |
|
|
0.12 |
|
|
(0.05 |
) |
|
|
(16 |
)% |
F |
||||
|
Cash flow from operating activities |
506 |
|
|
678 |
|
|
230 |
|
|
|
(25 |
)% |
F |
||||
|
Free cash flow (non-GAAP) |
385 |
|
|
498 |
|
|
63 |
|
|
|
(23 |
)% |
F |
||||
|
"F" is used in most instances when variance is above 100%. Additionally, "U" is used in most instances when variance is below (100)%. |
“We are pleased with our second quarter results as we continued to generate significant free cash flow, execute on our strategy, and lead in the energy transition. During the quarter, TPS and OFE delivered solid orders and operating income while OFS continued to improve margins. We continued to invest and collaborate in strategic areas for new energy frontiers, advancing our partnerships in hydrogen,
“As we look ahead to the second half of 2021, we see continued signs of global economic recovery that should drive further demand growth for oil and natural gas. Although we recognize the risks presented by the variant strains of the COVID-19 virus, we expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022.
“We remain focused on executing our strategy as the macro economy improves and our customers continue on their journey to a net-zero future. We look forward to supporting our customers, advancing our strategic priorities, and delivering for our shareholders,” concluded Simonelli.
Quarter Highlights
Supporting our Customers
The OFS segment executed an innovative Integrated Well Services tripartite agreement with bp and Odfjell Drilling to work together and transform platform drilling and completions activity in the North Sea’s
OFS continued to secure contracts for its differentiated portfolio of electrical submersible pump systems (ESPs) in multiple regions. In the
OFS also increased its leadership position in
The OFE segment secured multiple significant contracts with Petrobras in the second quarter and continued to gain traction with its Subsea Connect portfolio of technologies. OFE signed a frame agreement for two flexible pipe contracts across five of Petrobras’ offshore fields, totaling more than 300 kilometers of pipe to ensure reliable connections and optimal flow under high pressures, extreme temperatures and corrosive conditions. OFE was also awarded a subsea oilfield equipment contract from Petrobras as part of the Marlim and Voador field revitalization plan in the
The TPS segment maintained its LNG leadership with several new equipment contracts in multiple regions, including the supply of main refrigerant and power generation technology for Nigeria LNG’s Train 7 project and aeroderivative gas turbine and compression technology for New Fortress Energy’s first “Fast LNG” modular offshore liquefaction project.
TPS secured a key contract for an ethylene cracker facility in
The DS segment continued to secure important contracts to advance customers’ energy transition goals, helping to reduce methane and
DS secured a flare.IQ contract with bp, marking the first time flare.IQ will be used in the upstream oil and gas sector and continuing the two companies’ partnership to measure and reduce bp’s emissions from flaring at its global flaring operations. flare.IQ will be embedded into bp’s existing System 1 condition monitoring software from
DS continued to expand its industrial asset management wins across multiple end-markets.
Executing on Priorities
Baker Hughes led another consecutive quarter in transforming its core operations, investing for growth in strategic areas, and positioning the Company for new frontiers.
The Company announced multiple collaborations and investments to decarbonize industries and develop low and zero-
- Announced intention for Baker Hughes to become a cornerstone investor in the
FiveT Hydrogen Fund alongside Chart Industries and Plug Power, helping to advance the hydrogen economy and infrastructure projects necessary for the hydrogen value chain. - Announced an investment in Electrochaea, a growth-stage technology company, to expand Baker Hughes’
carbon capture, utilization and storage (CCUS) portfolio with power-to-gas solutions. Baker Hughes will combine its post-combustioncarbon capture technology with Electrochaea’s bio-methanation technology to transform CO2 emissions into lower-carbon synthetic natural gas. Baker Hughes will take an approximately 15% stake in Electrochaea and assume a seat on Electrochaea’s Board of Directors. - Signed a strategic global agreement with Air Products to develop next generation hydrogen compression solutions to lower the cost of production and accelerate adoption of hydrogen as a zero-
carbon fuel. Baker Hughes will provide advanced technologies for global hydrogen projects including the NovaLT16 turbine for Air Products’ net-zero hydrogen energy complex inAlberta, Canada , as well as advanced compression technology for the NEOMcarbon -free hydrogen project in theKingdom of Saudi Arabia . - Signed an agreement with Borg CO2, a Norwegian
carbon capture and storage developer for industrial clusters, to collaborate on a CCUS project to service as a decarbonization hub for multiple industrial sites in the Viken region ofNorway . The project aims to capture and store up to 90% of the CO2 from the industrial sites, eventually being liquified, shipped and stored underneath the seabed of theNorth Sea . Borg CO2 will leverage Baker Hughes’ CCUS technology portfolio, including the Chilled Ammonia Process and CompactCarbon Capture solutions. - Signed an agreement with Bloom Energy to collaborate on the potential deployment of integrated, low-
carbon power generation and hydrogen solutions. The two companies will focus on developing integrated power solutions using Bloom Energy’s solid oxide fuel cell technology and Baker Hughes NovaLT gas turbine technology; integrated hydrogen solutions using Bloom Energy’s solid oxide electrolyzer cells with Baker Hughes’ hydrogen compression technology; and opportunities to leverage both companies’ portfolios for low-carbon and emissions reduction solutions. Pilot projects are expected to be launched in the next 2-3 years. - Signed an agreement with Samsung Engineering to identify joint business development opportunities for energy and industrial customers to reduce their emissions. The two companies will focus on hydrogen and CCUS projects, leveraging Baker Hughes’ compression, NovaLT gas turbines, flexible pipe, and condition monitoring technologies and services. The two companies will initially focus on key Korean customers and projects including refineries, petrochemical plants, and industrial environmental facilities.
- Signed an agreement with Rosetti Marino, a provider of integrated project execution, engineering, procurement, fabrication, installation and commissioning services for the oil and gas, renewables, chemical, power generation and shipbuilding sectors. The two companies will collaborate on jointly developing CCUS projects, initially focusing on opportunities in
Italy to boost the activation of a local supply chain and drive progress in energy transition in the region.
Baker Hughes signed a major agreement with
The companies will partner to test artificial lift systems (ALS) technology using Baker Hughes’s ESPs with LUKOIL’s leading energy efficient
TPS continued its focus on services growth, maintaining long-term relationships with LNG customers and achieving a major milestone by securing a six-year services contract extension in
Leading with Innovation
Baker Hughes continued to develop and deploy technologies to advance the energy transition, improve efficiencies, reduce emissions and accelerate digital transformation for industrial customers.
The BakerHughesC3.ai joint venture alliance (BHC3) announced that KBC, a wholly-owned subsidiary of Yokogawa Electric corporation, has adopted BHC3’s artificial intelligence (AI) technology to enhance its existing software portfolio for oil and gas process simulation, supply chain optimization and energy management. BHC3’s AI solutions will provide continuous automated updates to physics-based simulations through a flexible model to scale for any industrial configuration and environment. KBC expects the software deployment to generate significant annual economic value for customers, estimating that improved operations will yield more than
DS continued to drive digital transformation for industrial customers through its Nexus Controls and
Waygate Technologies launched a new digital service using advanced robotics to provide safe and efficient inspection as well as cleaning of industrial boilers. The service, known as Boiler Robotic Inspection & Cleaning (BRIC), leverages sophisticated ultrasonic and visual sensors and was developed in close collaboration with BASF, a world leader in chemicals. BRIC eliminates physical risks of inspections, provides more precise data than competing technologies, and dramatically cuts costs for customers in the chemical, pulp & paper, energy and other manufacturing industries.
TPS continued to advance technologies for the energy transition. As part of a research and innovation consortium funded by the EU Horizon 2020 program, TPS is developing supercritical CO2 technologies for flexible and efficient energy storage systems, with a first of its kind compressor to be used in thermal power plants. The compressor prototype is being tested at Baker Hughes’ facilities in
Consolidated Results by Reporting Segment
|
Consolidated Orders by Reporting Segment |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Consolidated segment orders |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Oilfield Services |
$ |
2,359 |
|
$ |
2,200 |
|
$ |
2,411 |
|
|
7 |
% |
(2 |
)% |
|
Oilfield Equipment |
681 |
|
345 |
|
699 |
|
|
97 |
% |
(3 |
)% |
|||
|
Turbomachinery & Process Solutions |
1,513 |
|
1,447 |
|
1,313 |
|
|
5 |
% |
15 |
% |
|||
|
Digital Solutions |
540 |
|
549 |
|
465 |
|
|
(2 |
)% |
16 |
% |
|||
|
Total |
$ |
5,093 |
|
$ |
4,541 |
|
$ |
4,888 |
|
|
12 |
% |
4 |
% |
Orders for the quarter were
Year-over-year, the increase in orders was a result of higher order intake in Turbomachinery & Process Solutions and Digital Solutions, partially offset by a decline in Oilfield Equipment and Oilfield Services. Year-over-year equipment orders were down 6% and service orders were up 12%.
The Company's total book-to-bill ratio in the quarter was 1.0; the equipment book-to-bill ratio in the quarter was 0.9.
Remaining Performance Obligations (RPO) in the second quarter ended at
|
Consolidated Revenue by Reporting Segment |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Consolidated segment revenue |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Oilfield Services |
$ |
2,358 |
|
$ |
2,200 |
|
$ |
2,411 |
|
|
7 |
% |
(2 |
)% |
|
Oilfield Equipment |
637 |
|
628 |
|
696 |
|
|
1 |
% |
(8 |
)% |
|||
|
Turbomachinery & Process Solutions |
1,628 |
|
1,485 |
|
1,161 |
|
|
10 |
% |
40 |
% |
|||
|
Digital Solutions |
520 |
|
470 |
|
468 |
|
|
11 |
% |
11 |
% |
|||
|
Total |
$ |
5,142 |
|
$ |
4,782 |
|
$ |
4,736 |
|
|
8 |
% |
9 |
% |
Revenue for the quarter was
Compared to the same quarter last year, revenue was up 9%, driven by higher volume in Turbomachinery & Process Solutions and Digital Solutions segments, partially offset by Oilfield Equipment and Oilfield Services.
|
Consolidated Operating Income by Reporting Segment |
|||||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
||||||||||||||
|
Segment operating income |
|
|
|
|
Sequential |
Year-over- |
|||||||||||
|
Oilfield Services |
$ |
171 |
|
|
$ |
143 |
|
|
$ |
46 |
|
|
|
20 |
% |
F |
|
|
Oilfield Equipment |
28 |
|
|
4 |
|
|
(14 |
) |
|
|
F |
F |
|||||
|
Turbomachinery & Process Solutions |
220 |
|
|
207 |
|
|
149 |
|
|
|
6 |
% |
48 |
% |
|||
|
Digital Solutions |
25 |
|
|
24 |
|
|
41 |
|
|
|
3 |
% |
(39 |
)% |
|||
|
Total segment operating income |
444 |
|
|
379 |
|
|
221 |
|
|
|
17 |
% |
F |
||||
|
Corporate |
(111 |
) |
|
(109 |
) |
|
(117 |
) |
|
|
(2 |
)% |
5 |
% |
|||
|
Inventory impairment |
— |
|
|
— |
|
|
(16 |
) |
|
|
— |
% |
F |
||||
|
Restructuring, impairment & other |
(125 |
) |
|
(80 |
) |
|
(103 |
) |
|
|
(56 |
)% |
(21 |
)% |
|||
|
Separation related |
(15 |
) |
|
(27 |
) |
|
(37 |
) |
|
|
46 |
% |
60 |
% |
|||
|
Operating income (loss) |
194 |
|
|
164 |
|
|
(52 |
) |
|
|
18 |
% |
F |
||||
|
Adjusted operating income* |
333 |
|
|
270 |
|
|
104 |
|
|
|
23 |
% |
F |
||||
|
Depreciation & amortization |
278 |
|
|
292 |
|
|
340 |
|
|
|
(5 |
)% |
(18 |
)% |
|||
|
Adjusted EBITDA* |
$ |
611 |
|
|
$ |
562 |
|
|
$ |
444 |
|
|
|
9 |
% |
38 |
|
|
*Non-GAAP measure. |
|
"F" is used in most instances when variance is above 100%. Additionally, "U" is used in most instances when variance is below (100)%. |
On a GAAP basis, operating income for the second quarter of 2021 was
Adjusted operating income (a non-GAAP measure) for the second quarter of 2021 was
Depreciation and amortization for the second quarter of 2021 was
Adjusted EBITDA (a non-GAAP measure) for the second quarter of 2021 was
Corporate costs were
Other Financial Items
Income tax expense in the second quarter of 2021 was
Other non-operating loss in the second quarter of 2021 was
GAAP diluted loss per share was
Cash flow from operating activities was
Capital expenditures, net of proceeds from disposal of assets, were
Results by Reporting Segment
The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results on a sequential or year-over-year basis, depending on the business dynamics of the reporting segments.
|
Oilfield Services |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Oilfield Services |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Revenue |
$ |
2,358 |
|
$ |
2,200 |
|
$ |
2,411 |
|
|
7 |
% |
(2 |
)% |
|
Operating income |
$ |
171 |
|
$ |
143 |
|
$ |
46 |
|
|
20 |
% |
F |
|
|
Operating income margin |
7.3 |
% |
6.5 |
% |
1.9 |
% |
|
0.8 |
pts |
5.4 |
pts |
|||
|
Depreciation & amortization |
$ |
195 |
|
$ |
201 |
|
$ |
248 |
|
|
(3 |
)% |
(21 |
)% |
|
EBITDA* |
$ |
366 |
|
$ |
344 |
|
$ |
293 |
|
|
7 |
% |
25 |
% |
|
EBITDA margin* |
15.5 |
% |
15.6 |
% |
12.2 |
% |
|
(0.1 |
)pts |
3.4 |
pts |
|||
Oilfield Services (OFS) revenue of
Segment operating income before tax for the quarter was
|
Oilfield Equipment |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Oilfield Equipment |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Orders |
$ |
681 |
|
$ |
345 |
|
$ |
699 |
|
|
97 |
% |
(3 |
)% |
|
Revenue |
$ |
637 |
|
$ |
628 |
|
$ |
696 |
|
|
1 |
% |
(8 |
)% |
|
Operating income (loss) |
$ |
28 |
|
$ |
4 |
|
$ |
(14 |
) |
|
F |
F |
||
|
Operating income margin |
4.3 |
% |
0.7 |
% |
(2.1 |
)% |
|
3.7 |
pts |
6.4 |
pts |
|||
|
Depreciation & amortization |
$ |
26 |
|
$ |
32 |
|
$ |
34 |
|
|
(21 |
)% |
(25 |
)% |
|
EBITDA* |
$ |
53 |
|
$ |
37 |
|
$ |
20 |
|
|
45 |
% |
F |
|
|
EBITDA margin* |
8.4 |
% |
5.8 |
% |
2.9 |
% |
|
2.5 |
pts |
5.5 |
pts |
|||
Oilfield Equipment (OFE) orders of
|
*Non-GAAP measure. |
OFE revenue of
Segment operating income before tax for the quarter was
|
Turbomachinery & Process Solutions |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Turbomachinery & Process Solutions |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Orders |
$ |
1,513 |
|
$ |
1,447 |
|
$ |
1,313 |
|
|
5 |
% |
15 |
% |
|
Revenue |
$ |
1,628 |
|
$ |
1,485 |
|
$ |
1,161 |
|
|
10 |
% |
40 |
% |
|
Operating income |
$ |
220 |
|
$ |
207 |
|
$ |
149 |
|
|
6 |
% |
48 |
% |
|
Operating income margin |
13.5 |
% |
13.9 |
% |
12.8 |
% |
|
(0.5 |
)pts |
0.7 |
pts |
|||
|
Depreciation & amortization |
$ |
30 |
|
$ |
30 |
|
$ |
27 |
|
|
1 |
% |
13 |
% |
|
EBITDA* |
$ |
250 |
|
$ |
237 |
|
$ |
176 |
|
|
5 |
% |
42 |
% |
|
EBITDA margin* |
15.4 |
% |
16.0 |
% |
15.1 |
% |
|
(0.6 |
)pts |
0.2 |
pts |
|||
Turbomachinery & Process Solutions (TPS) orders were up
TPS revenue of
Segment operating income before tax for the quarter was
|
Digital Solutions |
||||||||||||||
|
(in millions) |
Three Months Ended |
|
Variance |
|||||||||||
|
Digital Solutions |
|
|
|
|
Sequential |
Year-over- |
||||||||
|
Orders |
$ |
540 |
|
$ |
549 |
|
$ |
465 |
|
|
(2 |
)% |
16 |
% |
|
Revenue |
$ |
520 |
|
$ |
470 |
|
$ |
468 |
|
|
11 |
% |
11 |
% |
|
Operating income |
$ |
25 |
|
$ |
24 |
|
$ |
41 |
|
|
3 |
% |
(39 |
)% |
|
Operating income margin |
4.8 |
% |
5.2 |
% |
8.8 |
% |
|
(0.3 |
)pts |
(4 |
)pts |
|||
|
Depreciation & amortization |
$ |
22 |
|
$ |
21 |
|
$ |
24 |
|
|
4 |
% |
(7 |
)% |
|
EBITDA* |
$ |
47 |
|
$ |
46 |
|
$ |
65 |
|
|
4 |
% |
(28 |
)% |
|
EBITDA margin* |
9.1 |
% |
9.7 |
% |
14.0 |
% |
|
(0.6 |
)pts |
(4.8 |
)pts |
|||
|
*Non-GAAP measure. |
Digital Solutions (DS) orders of
DS revenue of
Segment operating income before tax for the quarter was
Reconciliation of GAAP to non-GAAP Financial Measures
Management provides non-GAAP financial measures because it believes such measures are widely accepted financial indicators used by investors and analysts to analyze and compare companies on the basis of operating performance and liquidity, and that these measures may be used by investors to make informed investment decisions.
|
Table 1a. Reconciliation of GAAP and Adjusted Operating Income/(Loss) |
|||||||||
|
|
Three Months Ended |
||||||||
|
(in millions) |
|
|
|
||||||
|
Operating income (loss) (GAAP) |
$ |
194 |
|
$ |
164 |
|
$ |
(52 |
) |
|
Separation related |
15 |
|
27 |
|
37 |
|
|||
|
Restructuring, impairment & other |
125 |
|
80 |
|
103 |
|
|||
|
Inventory impairment |
— |
|
— |
|
16 |
|
|||
|
Total operating income adjustments |
139 |
|
106 |
|
156 |
|
|||
|
Adjusted operating income (non-GAAP) |
$ |
333 |
|
$ |
270 |
|
$ |
104 |
|
Table 1a reconciles operating income (loss), which is the directly comparable financial result determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted operating income (a non-GAAP financial measure). Adjusted operating income excludes the impact of certain identified items.
|
Table 1b. Reconciliation of Operating Income (Loss) to EBITDA and Adjusted EBITDA |
|||||||||
|
|
Three Months Ended |
||||||||
|
(in millions) |
|
|
|
||||||
|
Operating income (loss) (GAAP) |
$ |
194 |
|
$ |
164 |
|
$ |
(52 |
) |
|
Depreciation & amortization |
278 |
|
292 |
|
340 |
|
|||
|
EBITDA (non-GAAP) |
472 |
|
456 |
|
288 |
|
|||
|
Total operating income adjustments (1) |
139 |
|
106 |
|
156 |
|
|||
|
Adjusted EBITDA (non-GAAP) |
$ |
611 |
|
$ |
562 |
|
$ |
444 |
|
|
(1) |
See Table 1a for the identified adjustments to operating income. |
Table 1b reconciles operating income (loss), which is the directly comparable financial result determined in accordance with GAAP, to EBITDA (a non-GAAP financial measure). Adjusted EBITDA (a non-GAAP financial measure) excludes the impact of certain identified items.
|
Table 1c. Reconciliation of Net Income (Loss) Attributable to Baker Hughes to Adjusted Net Income (Loss) Attributable to Baker Hughes |
||||||||||||
|
|
Three Months Ended |
|||||||||||
|
(in millions, except per share amounts) |
|
|
|
|||||||||
|
Net loss attributable to Baker Hughes (GAAP) |
$ |
(68 |
) |
|
$ |
(452 |
) |
|
$ |
(195 |
) |
|
|
Total operating income adjustments (1) |
139 |
|
|
106 |
|
|
156 |
|
|
|||
|
Other adjustments (non-operating) (2) |
71 |
|
|
663 |
|
|
156 |
|
|
|||
|
Tax on total adjustments |
(19 |
) |
|
(33 |
) |
|
(11 |
) |
|
|||
|
Total adjustments, net of income tax |
191 |
|
|
736 |
|
|
301 |
|
|
|||
|
Less: adjustments attributable to noncontrolling interests |
40 |
|
|
193 |
|
|
138 |
|
|
|||
|
Adjustments attributable to Baker Hughes |
151 |
|
|
543 |
|
|
164 |
|
|
|||
|
Adjusted net income (loss) attributable to Baker Hughes (non-GAAP) |
$ |
83 |
|
|
$ |
91 |
|
|
$ |
(31 |
) |
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
|
Denominator: |
|
|
|
|||||||||
|
Weighted-average shares of Class A common stock outstanding diluted |
811 |
|
|
746 |
|
|
655 |
|
|
|||
|
Adjusted earnings (loss) per Class A share— diluted (non-GAAP) |
$ |
0.10 |
|
|
$ |
0.12 |
|
|
$ |
(0.05 |
) |
|
|
(1) |
See Table 1a for the identified adjustments to operating income. |
|
|
(2) |
2Q'21 primarily due to a non-recurring charge for a loss contingency related to certain tax matters and losses from the net change in fair value of our investment in C3.ai. 1Q'21 primarily related to the losses from the net change in fair value of our investment in C3.ai, partially offset by the reversal of current accruals due to the settlement of certain legal matters. 2Q'20 primarily driven by the loss on sale of a business, partially offset by a tax benefit related to the CARES Act. |
Table 1c reconciles net income (loss) attributable to Baker Hughes, which is the directly comparable financial result determined in accordance with GAAP, to adjusted net income attributable to Baker Hughes (a non-GAAP financial measure). Adjusted net income attributable to Baker Hughes excludes the impact of certain identified items.
|
Table 1d. Reconciliation of Cash Flow From Operating Activities to Free Cash Flow |
||||||||||||
|
|
Three Months Ended |
|||||||||||
|
(in millions) |
|
|
|
|||||||||
|
Cash flow from operating activities (GAAP) |
$ |
506 |
|
|
$ |
678 |
|
|
$ |
230 |
|
|
|
Add: cash used in capital expenditures, net of proceeds from disposal of assets |
(121 |
) |
|
(180 |
) |
|
(167 |
) |
|
|||
|
Free cash flow (non-GAAP) |
$ |
385 |
|
|
$ |
498 |
|
|
$ |
63 |
|
|
Table 1d reconciles net cash flows from operating activities, which is the directly comparable financial result determined in accordance with GAAP, to free cash flow (a non-GAAP financial measure). Free cash flow is defined as net cash flows from operating activities less expenditures for capital assets plus proceeds from disposal of assets.
Financial Tables (GAAP)
|
Condensed Consolidated Statements of Income (Loss) |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
(In millions, except per share amounts) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
||||||||
|
Revenue |
$ |
5,142 |
|
|
$ |
4,736 |
|
|
$ |
9,924 |
|
|
$ |
10,160 |
|
|
|
Costs and expenses: |
|
|
|
|
||||||||||||
|
Cost of revenue |
4,166 |
|
|
4,058 |
|
|
8,090 |
|
|
8,727 |
|
|
||||
|
Selling, general and administrative |
642 |
|
|
590 |
|
|
1,229 |
|
|
1,265 |
|
|
||||
|
|
— |
|
|
— |
|
|
— |
|
|
14,773 |
|
|
||||
|
Restructuring, impairment and other |
125 |
|
|
103 |
|
|
205 |
|
|
1,429 |
|
|
||||
|
Separation related |
15 |
|
|
37 |
|
|
42 |
|
|
77 |
|
|
||||
|
Total costs and expenses |
4,948 |
|
|
4,788 |
|
|
9,566 |
|
|
26,271 |
|
|
||||
|
Operating income (loss) |
194 |
|
|
(52 |
) |
|
358 |
|
|
(16,111 |
) |
|
||||
|
Other non-operating loss, net |
(63 |
) |
|
(244 |
) |
|
(689 |
) |
|
(219 |
) |
|
||||
|
Interest expense, net |
(65 |
) |
|
(69 |
) |
|
(138 |
) |
|
(128 |
) |
|
||||
|
Income (loss) before income taxes |
66 |
|
|
(365 |
) |
|
(469 |
) |
|
(16,458 |
) |
|
||||
|
Benefit (provision) for income taxes |
(143 |
) |
|
21 |
|
|
(213 |
) |
|
16 |
|
|
||||
|
Net loss |
(77 |
) |
|
(344 |
) |
|
(682 |
) |
|
(16,442 |
) |
|
||||
|
Less: Net loss attributable to noncontrolling interests |
(9 |
) |
|
(149 |
) |
|
(162 |
) |
|
(6,020 |
) |
|
||||
|
Net loss attributable to |
$ |
(68 |
) |
|
$ |
(195 |
) |
|
$ |
(520 |
) |
|
$ |
(10,422 |
) |
|
|
|
|
|
|
|
||||||||||||
|
Per share amounts: |
|
|
|
|||||||||||||
|
Basic and diluted loss per Class A common stock |
$ |
(0.08 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.67 |
) |
|
$ |
(15.93 |
) |
|
|
|
|
|
|
|
||||||||||||
|
Weighted average shares: |
|
|
|
|
||||||||||||
|
Class A basic & diluted |
806 |
|
|
655 |
|
|
773 |
|
|
654 |
|
|
||||
|
|
|
|
|
|
||||||||||||
|
Cash dividend per Class A common stock |
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.36 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
||||||||||||
|
Condensed Consolidated Statements of Financial Position |
||||||
|
(Unaudited) |
||||||
|
(In millions) |
|
|
||||
|
ASSETS |
||||||
|
Current Assets: |
|
|
||||
|
Cash and cash equivalents |
$ |
3,913 |
|
$ |
4,132 |
|
|
Current receivables, net |
5,407 |
|
5,622 |
|
||
|
Inventories, net |
4,212 |
|
4,421 |
|
||
|
All other current assets |
1,980 |
|
2,280 |
|
||
|
Total current assets |
15,512 |
|
16,455 |
|
||
|
Property, plant and equipment, less accumulated depreciation |
5,086 |
|
5,358 |
|
||
|
|
6,052 |
|
5,977 |
|
||
|
Other intangible assets, net |
4,202 |
|
4,397 |
|
||
|
Contract and other deferred assets |
1,836 |
|
2,001 |
|
||
|
All other assets |
3,981 |
|
3,819 |
|
||
|
Total assets |
$ |
36,669 |
|
$ |
38,007 |
|
|
LIABILITIES AND EQUITY |
||||||
|
Current Liabilities: |
|
|
||||
|
Accounts payable |
$ |
3,593 |
|
$ |
3,532 |
|
|
Short-term debt and current portion of long-term debt |
51 |
|
889 |
|
||
|
Progress collections and deferred income |
3,467 |
|
3,454 |
|
||
|
All other current liabilities |
2,694 |
|
2,352 |
|
||
|
Total current liabilities |
9,805 |
|
10,227 |
|
||
|
Long-term debt |
6,722 |
|
6,744 |
|
||
|
Liabilities for pensions and other employee benefits |
1,163 |
|
1,217 |
|
||
|
All other liabilities |
1,579 |
|
1,577 |
|
||
|
Equity |
17,400 |
|
18,242 |
|
||
|
Total liabilities and equity |
$ |
36,669 |
|
$ |
38,007 |
|
|
|
|
|
||||
|
Outstanding |
|
|
||||
|
Class A common stock |
828 |
|
724 |
|
||
|
Class B common stock |
214 |
|
311 |
|
||
|
Condensed Consolidated Statements of Cash Flows |
||||||||||||
|
(Unaudited) |
||||||||||||
|
|
Three Months |
Six Months Ended |
||||||||||
|
(In millions) |
2021 |
|
2021 |
|
2020 |
|
||||||
|
Cash flows from operating activities: |
|
|
|
|||||||||
|
Net loss |
$ |
(77 |
) |
|
$ |
(682 |
) |
|
$ |
(16,442 |
) |
|
|
Adjustments to reconcile net loss to net cash flows from operating activities: |
|
|
|
|||||||||
|
Depreciation and amortization |
278 |
|
|
570 |
|
|
694 |
|
|
|||
|
|
— |
|
|
— |
|
|
14,773 |
|
|
|||
|
Other asset impairments |
34 |
|
|
22 |
|
|
1,127 |
|
|
|||
|
Loss on sale of business |
— |
|
|
— |
|
|
217 |
|
|
|||
|
Loss on equity securities |
27 |
|
|
815 |
|
|
— |
|
|
|||
|
Working capital |
166 |
|
|
571 |
|
|
388 |
|
|
|||
|
Other operating items, net |
78 |
|
|
(112 |
) |
|
(49 |
) |
|
|||
|
Net cash flows from operating activities |
506 |
|
|
1,184 |
|
|
708 |
|
|
|||
|
Cash flows from investing activities: |
|
|
|
|||||||||
|
Expenditures for capital assets, net of proceeds from disposal of assets |
(121 |
) |
|
(301 |
) |
|
(493 |
) |
|
|||
|
Other investing items, net |
165 |
|
|
171 |
|
|
56 |
|
|
|||
|
Net cash flows from (used in) investing activities |
44 |
|
|
(130 |
) |
|
(437 |
) |
|
|||
|
Cash flows from financing activities: |
|
|
|
|||||||||
|
Net repayments of debt and other borrowings |
(9 |
) |
|
(45 |
) |
|
(149 |
) |
|
|||
|
Proceeds from (repayment of) commercial paper |
(832 |
) |
|
(832 |
) |
|
737 |
|
|
|||
|
Proceeds from issuance of long-term debt |
— |
|
|
— |
|
|
500 |
|
|
|||
|
Dividends paid |
(149 |
) |
|
(280 |
) |
|
(236 |
) |
|
|||
|
Distributions to |
(39 |
) |
|
(95 |
) |
|
(136 |
) |
|
|||
|
Other financing items, net |
(1 |
) |
|
(33 |
) |
|
(21 |
) |
|
|||
|
Net cash flows from (used in) financing activities |
(1,030 |
) |
|
(1,285 |
) |
|
695 |
|
|
|||
|
Effect of currency exchange rate changes on cash and cash equivalents |
11 |
|
|
12 |
|
|
(83 |
) |
|
|||
|
Increase (decrease) in cash and cash equivalents |
(469 |
) |
|
(219 |
) |
|
883 |
|
|
|||
|
Cash and cash equivalents, beginning of period |
4,382 |
|
|
4,132 |
|
|
3,249 |
|
|
|||
|
Cash and cash equivalents, end of period |
$ |
3,913 |
|
|
$ |
3,913 |
|
|
$ |
4,132 |
|
|
|
Supplemental cash flows disclosures: |
|
|
|
|||||||||
|
Income taxes paid, net of refunds |
$ |
9 |
|
|
$ |
48 |
|
|
$ |
211 |
|
|
|
Interest paid |
$ |
106 |
|
|
$ |
157 |
|
|
$ |
141 |
|
|
Supplemental Financial Information
Supplemental financial information can be found on the Company’s website at: investors.bakerhughes.com in the Financial Information section under Quarterly Results.
Conference Call and Webcast
The Company has scheduled an investor conference call to discuss management’s outlook and the results reported in today’s earnings announcement. The call will begin at
Forward-Looking Statements
This news release (and oral statements made regarding the subjects of this release) may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (each a “forward-looking statement”). The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “estimate,” “project,” “foresee,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “potential,” “would,” “may,” “probable,” “likely,” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. There are many risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These forward-looking statements are also affected by the risk factors described in the Company’s annual report on Form 10-K for the annual period ended
Our expectations regarding our business outlook and business plans; the business plans of our customers; oil and natural gas market conditions; cost and availability of resources; economic, legal and regulatory conditions, and other matters are only our forecasts regarding these matters.
These forward-looking statements, including forecasts, may be substantially different from actual results, which are affected by many risks, along with the following risk factors and the timing of any of these risk factors:
Restructuring - Our restructuring plans may not be successful and achieve the expected result; continued deterioration of market conditions, whether due to the continued spread of COVID-19 or other events could result in further restructuring costs and impairments.
COVID-19 - The continued spread of the COVID-19 virus and the continuation of the measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, and the related uncertainties.
GE Separation - The failure to successfully eliminate dependencies on
Economic and political conditions - the impact of worldwide economic conditions; the effect that declines in credit availability may have on worldwide economic growth and demand for hydrocarbons; foreign currency exchange fluctuations and changes in the capital markets in locations where we operate; and the impact of government disruptions and sanctions.
Orders and RPO - our ability to execute on orders and RPO in accordance with agreed specifications, terms and conditions and convert those orders and RPO to revenue and cash.
Oil and gas market conditions - the level of petroleum industry exploration, development and production expenditures; the price of, volatility in pricing of, and the demand for crude oil and natural gas; drilling activity; drilling permits for and regulation of the shelf and the deepwater drilling; excess productive capacity; crude and product inventories; liquefied natural gas supply and demand; seasonal and other adverse weather conditions that affect the demand for energy; severe weather conditions, such as tornadoes and hurricanes, that affect exploration and production activities;
Terrorism and geopolitical risks - war, military action, terrorist activities or extended periods of international conflict, particularly involving any petroleum-producing or -consuming regions; labor disruptions, civil unrest or security conditions where we operate; potentially burdensome taxation, expropriation of assets by governmental action; cybersecurity risks and cyber incidents or attacks; epidemic outbreaks.
About Baker Hughes:
View source version on businesswire.com: https://www.businesswire.com/news/home/20210721005143/en/
Investor Relations
+1 281-809-9088
investor.relations@bakerhughes.com
Media Relations
+1 713-879-2862
thomas.millas@bakerhughes.com
Source: